nrix-10q_20210531.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                        

Commission File Number: 001-39398

 

NURIX THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

 

27-0838048

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

1700 Owens Street, Suite 205

San Francisco, CA

 

94158

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (415) 660-5320

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.001 per share

 

NRIX

 

Nasdaq Global Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).     Yes  ☒    No  

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes     No  

As of July 9, 2021, the Registrant had 44,426,856 shares of common stock, $0.001 par value per share, outstanding.

 

 

 


 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements concerning our business strategy and plans, future operating results and financial position, as well as our objectives and expectations for our future operations, are forward-looking statements.

In some cases, you can identify forward-looking statements by such terminology as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes, although not all forward-looking statements contain these words. Forward-looking statements include, but are not limited to, statements about:

 

the timing of our planned investigational new drug application (IND) submissions for our lead drug candidates and other drug candidates;

 

the timing and conduct of our clinical trial programs for our lead drug candidates NX-2127, NX-1607, NX-5948, DeTIL-0255 and other drug candidates, including statements regarding the timing of initiation of the clinical trials;

 

the timing of, and our ability to obtain, marketing approvals for our lead drug candidates NX-2127, NX-1607, NX-5948, DeTIL-0255 and other drug candidates;

 

our plans to pursue research and development of other drug candidates;

 

the potential advantages of our DELigase platform and our drug candidates;

 

the extent to which our scientific approach and DELigase platform may potentially address a broad range of diseases;

 

the potential benefits of our arrangements with Sanofi S.A. and Gilead Sciences, Inc.;

 

the timing of and our ability to obtain and maintain regulatory approvals for our drug candidates;

 

the potential receipt of revenue from future sales of our drug candidates;

 

the rate and degree of market acceptance and clinical utility of our drug candidates;

 

our estimates regarding the potential market opportunity for our drug candidates;

 

our sales, marketing and distribution capabilities and strategy;

 

our ability to establish and maintain arrangements for the manufacturing of our drug candidates;

 

the impact of the ongoing coronavirus (COVID-19) pandemic on our business, clinical trials, financial condition, liquidity and results of operations;

 

the potential achievement of milestones and receipt of royalty payments under our collaborations;

 

our ability to enter into additional collaborations with third parties;

 

our intellectual property position;

 

our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;

 

the impact of government laws and regulations; and

 

our competitive position.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, and financial needs. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. We disclaim any intention or obligation to publicly update or revise any forward-looking statements for any reason or to conform such statements to actual results or revised expectations, except as required by law.


 


 

 

TABLE OF CONTENTS

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations

2

 

Condensed Consolidated Statements of Comprehensive (Income) Loss

3

 

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

4

 

Condensed Consolidated Statements of Cash Flows

6

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

Item 4.

Controls and Procedures

31

PART II.

OTHER INFORMATION

32

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

80

Item 3.

Defaults Upon Senior Securities

80

Item 4.

Mine Safety Disclosures

80

Item 5.

Other Information

80

Item 6.

Exhibits

81

SIGNATURES

82

 

 

 


 

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

NURIX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

May 31,

 

 

November 30,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

188,207

 

 

$

119,356

 

Short-term investments

 

 

197,814

 

 

 

161,792

 

Accounts receivable

 

 

2,537

 

 

 

 

Contract assets

 

 

 

 

 

7,500

 

Income tax receivable

 

 

3,142

 

 

 

3,846

 

Prepaid expenses and other current assets

 

 

4,581

 

 

 

5,940

 

Total current assets

 

 

396,281

 

 

 

298,434

 

Long-term investments

 

 

110,440

 

 

 

90,890

 

Property and equipment, net

 

 

8,345

 

 

 

6,672

 

Restricted cash

 

 

170

 

 

 

170

 

Other assets

 

 

2,745

 

 

 

177

 

Total assets

 

$

517,981

 

 

$

396,343

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,405

 

 

$

3,412

 

Accrued and other current liabilities

 

 

7,678

 

 

 

8,328

 

Deferred revenue, current

 

 

33,761

 

 

 

32,799

 

Total current liabilities

 

 

46,844

 

 

 

44,539

 

Deferred revenue, net of current portion

 

 

72,122

 

 

 

60,685

 

Other long-term liabilities

 

 

837

 

 

 

850

 

Total liabilities

 

 

119,803

 

 

 

106,074

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value— 10,000,000 shares

   authorized as of May 31, 2021 and

   November 30, 2020; 0 shares issued and outstanding

   as of May 31, 2021 and November 30, 2020

 

 

 

 

 

 

Common stock, $0.001 par value— 500,000,000 shares

   authorized as of May 31, 2021 and

   November 30, 2020; 44,403,547 and 38,864,872 shares

   issued and outstanding as of May 31, 2021 and

   November 30, 2020, respectively

 

 

44

 

 

 

39

 

Additional paid-in-capital

 

 

552,459

 

 

 

393,841

 

Accumulated other comprehensive income

 

 

30

 

 

 

87

 

Accumulated deficit

 

 

(154,355

)

 

 

(103,698

)

Total stockholders’ equity

 

 

398,178

 

 

 

290,269

 

Total liabilities and stockholders’ equity

 

$

517,981

 

 

$

396,343

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1


 

NURIX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended May 31,

 

 

Six Months Ended May 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Collaboration revenue

 

$

7,091

 

 

$

4,182

 

 

$

12,102

 

 

$

7,046

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

25,994

 

 

 

14,142

 

 

 

48,997

 

 

 

27,109

 

General and administrative

 

 

7,511

 

 

 

3,270

 

 

 

14,041

 

 

 

5,720

 

Total operating expenses

 

 

33,505

 

 

 

17,412

 

 

 

63,038

 

 

 

32,829

 

Loss from operations

 

 

(26,414

)

 

 

(13,230

)

 

 

(50,936

)

 

 

(25,783

)

Interest and other income, net

 

 

171

 

 

 

223

 

 

 

489

 

 

 

396

 

Loss before income taxes

 

 

(26,243

)

 

 

(13,007

)

 

 

(50,447

)

 

 

(25,387

)

Provision (benefit) for income taxes

 

 

139

 

 

 

(20,587

)

 

 

210

 

 

 

(20,576

)

Net income (loss)

 

$

(26,382

)

 

$

7,580

 

 

$

(50,657

)

 

$

(4,811

)

Net income (loss) per share attributable to common

   stockholders, basic

 

$

(0.60

)

 

$

 

 

$

(1.23

)

 

$

(1.32

)

Weighted-average number of shares outstanding,

   basic

 

 

43,804,066

 

 

 

3,731,838

 

 

 

41,318,281

 

 

 

3,636,140

 

Net income (loss) per share attributable to common

   stockholders, diluted

 

$

(0.60

)

 

$

 

 

$

(1.23

)

 

$

(1.32

)

Weighted-average number of shares outstanding,

   diluted

 

 

43,804,066

 

 

 

4,909,829

 

 

 

41,318,281

 

 

 

3,636,140

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

2


 

 

NURIX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

 

 

 

Three Months Ended May 31,

 

 

Six Months Ended May 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income (loss)

 

$

(26,382

)

 

$

7,580

 

 

$

(50,657

)

 

$

(4,811

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on

   available-for-sale investments

 

 

(19

)

 

 

82

 

 

 

(57

)

 

 

141

 

Total comprehensive income (loss)

 

$

(26,401

)

 

$

7,662

 

 

$

(50,714

)

 

$

(4,670

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

3


 

 

NURIX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share amounts)

(unaudited)

 

 

 

Redeemable convertible

preferred stock

 

 

 

Common stock

 

 

Additional

paid-in

 

 

Accumulated

other

comprehensive

 

 

Accumulated

 

 

Total

stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

income (loss)

 

 

deficit

 

 

(deficit)

 

Balance as of November 30, 2019

 

 

12,813,887

 

 

$

48,195

 

 

 

 

3,595,334

 

 

$

4

 

 

$

2,740

 

 

$

(2

)

 

$

(60,456

)

 

$

(57,714

)

Exercise of stock options

 

 

 

 

 

 

 

 

 

72,570

 

 

 

 

 

 

37

 

 

 

 

 

 

 

 

 

37

 

Repurchase of unvested early

   exercised stock options

 

 

 

 

 

 

 

 

 

(867

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of early-exercised

   stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31

 

 

 

 

 

 

 

 

 

31

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

176

 

 

 

 

 

 

 

 

 

176

 

Unrealized gain (loss) on

   available-for-sale

   investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

59

 

 

 

 

 

 

59

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,391

)

 

 

(12,391

)

Balance as of February 29, 2020

 

 

12,813,887

 

 

 

48,195

 

 

 

 

3,667,037

 

 

 

4

 

 

 

2,984

 

 

 

57

 

 

 

(72,847

)

 

 

(69,802

)

Issuance of Series D redeemable

   convertible preferred stock at

   $12.75 per share, net of

   issuance costs of $336

 

 

9,431,364

 

 

 

119,914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

125,708

 

 

 

 

 

 

118

 

 

 

 

 

 

 

 

 

118

 

Vesting of early-exercised

   stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

 

 

 

 

 

 

22

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

474

 

 

 

 

 

 

 

 

 

474

 

Unrealized gain (loss) on

   available-for-sale

   investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

82

 

 

 

 

 

 

82

 

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,580

 

 

 

7,580

 

Balance as of May 31, 2020

 

 

22,245,251

 

 

$

168,109

 

 

 

 

3,792,745

 

 

$

4

 

 

$

3,598

 

 

$

139

 

 

$

(65,267

)

 

$

(61,526

)

 

4


 

 

 

 

Redeemable convertible

preferred stock

 

 

 

Common stock

 

 

Additional

paid-in

 

 

Accumulated

other

comprehensive

 

 

Accumulated

 

 

Total

stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

income (loss)

 

 

deficit

 

 

(deficit)

 

Balance as of November 30, 2020

 

 

 

 

$

 

 

 

 

38,864,872

 

 

$

39

 

 

$

393,841

 

 

$

87

 

 

$

(103,698

)

 

$

290,269

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

190,825

 

 

 

 

 

 

394

 

 

 

 

 

 

 

 

 

394

 

Repurchase of unvested early

   exercised stock options

 

 

 

 

 

 

 

 

 

(971

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of early-exercised

   stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40

 

 

 

 

 

 

 

 

 

40

 

Issuance under Employee

   Stock Purchase Plan

 

 

 

 

 

 

 

 

 

64,589

 

 

 

 

 

 

1,043

 

 

 

 

 

 

 

 

 

1,043

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,700

 

 

 

 

 

 

 

 

 

2,700

 

Unrealized gain (loss) on

   available-for-sale

   investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(38

)

 

 

 

 

 

(38

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,275

)

 

 

(24,275

)

Balance as of February 28, 2021

 

 

 

 

 

 

 

 

 

39,119,315

 

 

 

39

 

 

 

398,018

 

 

 

49

 

 

 

(127,973

)

 

 

270,133

 

Issuance of common stock in

  connection with equity

  offering, net of offering

  costs of $643

 

 

 

 

 

 

 

 

 

5,175,000

 

 

 

5

 

 

 

150,152

 

 

 

 

 

 

 

 

 

150,157

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

109,232

 

 

 

 

 

 

241

 

 

 

 

 

 

 

 

 

241

 

Vesting of early-exercised

   stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

104

 

 

 

 

 

 

 

 

 

104

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,944

 

 

 

 

 

 

 

 

 

3,944

 

Unrealized gain (loss) on

   available-for-sale

   investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19

)

 

 

 

 

 

(19

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,382

)

 

 

(26,382

)

Balance as of May 31, 2021

 

 

 

 

$

 

 

 

 

44,403,547

 

 

$

44

 

 

$

552,459

 

 

$

30

 

 

$

(154,355

)

 

$

398,178

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

5


 

 

NURIX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Six Months Ended May 31,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(50,657

)

 

$

(4,811

)

Adjustments to reconcile net loss to net cash (used in)

  provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,288

 

 

 

986

 

Stock-based compensation

 

 

6,644

 

 

 

650

 

Net amortization (accretion) of premium (discount) on investments

 

 

566

 

 

 

50

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Contract assets

 

 

7,500

 

 

 

 

Accounts receivable

 

 

(2,537

)

 

 

 

Income tax receivable

 

 

704

 

 

 

(19,590

)

Prepaid expenses and other assets

 

 

(837

)

 

 

(2,056

)

Accounts payable

 

 

2,119

 

 

 

1,745

 

Deferred revenue

 

 

12,399

 

 

 

51,454

 

Accrued and other liabilities

 

 

(671

)

 

 

(1,885

)

Net cash (used in) provided by operating activities

 

 

(23,482

)

 

 

26,543

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of investments

 

 

(183,238

)

 

 

(29,640

)

Sales of investments

 

 

6,994

 

 

 

 

Maturities of investments

 

 

119,681

 

 

 

9,857

 

Purchases of property and equipment

 

 

(2,934

)

 

 

(1,977

)

Net cash used in investing activities

 

 

(59,497

)

 

 

(21,760

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of redeemable convertible preferred stock,

  net of offering costs

 

 

 

 

 

119,914

 

Proceeds from issuance of common stock, net of offering costs

 

 

150,157

 

 

 

 

Proceeds from exercise of stock options

 

 

631

 

 

 

177

 

Repurchase of unvested early exercised stock options

 

 

(1

)

 

 

(1

)

Proceeds from issuance under Employee Stock Purchase Plan

 

 

1,043

 

 

 

 

Payments of deferred offering costs

 

 

 

 

 

(360

)

Net cash provided by financing activities

 

 

151,830

 

 

 

119,730

 

Net increase in cash, cash equivalents and restricted cash

 

 

68,851

 

 

 

124,513

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

119,526

 

 

 

34,986

 

Cash, cash equivalents and restricted cash at end of period

 

$

188,377

 

 

$

159,499

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Additions to property and equipment included in accounts payable

   and accrued liabilities

 

$

607

 

 

$

927

 

Vesting of early exercised stock options

 

$

144

 

 

$

53

 

Deferred offering costs included in accounts payable and accrued liabilities

 

$

 

 

$

916

 

 

 

 

 

 

 

 

 

 

 

 

As of May 31,

 

 

 

2021

 

 

2020

 

Reconciliation of cash, cash equivalents, and restricted cash as shown

   in the statements of cash flows:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

188,207

 

 

$

159,329

 

Restricted cash

 

 

170

 

 

 

170

 

Total cash, cash equivalents and restricted cash

 

$

188,377

 

 

$

159,499

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

6


 

 

NURIX THERAPEUTICS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

Description of Business

Nurix Therapeutics, Inc. (the Company) previously known as Nurix, Inc., was incorporated in the state of Delaware on August 27, 2009 and is headquartered in San Francisco, California. The Company is a biopharmaceutical company focused on the discovery, development and commercialization of small molecule therapies designed to modulate cellular protein levels as a novel treatment approach for cancer and other challenging diseases. Leveraging the Company’s expertise in E3 ligases together with its proprietary DNA-encoded libraries, the Company has built DELigase, an integrated discovery platform to identify and advance novel drug candidates targeting E3 ligases, a broad class of enzymes that can modulate proteins within the cell. The Company’s drug discovery approach is to either harness or inhibit the natural function of E3 ligases within the ubiquitin-proteasome system to selectively decrease or increase cellular protein levels to treat disease.

The Company wholly owns a subsidiary, DeCART Therapeutics Inc. (DeCART), which was incorporated in the state of Delaware on June 22, 2020 and which holds a license to three of the Company’s compounds, including NX-0255, for drug-enhanced isolation of T cells exclusively with respect to three CAR-T therapy targets.

Initial Public Offering

On July 23, 2020, the Company’s registration statement on Form S-1 (File No. 333-239651) relating to its initial public offering (IPO) of common stock became effective. The IPO closed on July 28, 2020 at which time the Company issued 11,000,000 shares of its common stock at a price to the public of $19.00 per share. In addition, the underwriters exercised their option to purchase an additional 1,550,000 shares of the Company’s common stock on July 31, 2020, and this transaction closed on August 4, 2020. Immediately prior to the closing of the IPO, all outstanding shares of the Company’s redeemable convertible preferred stock automatically converted into 22,245,251 shares of common stock. Net proceeds from the IPO, including the exercise of the underwriters’ option to purchase additional shares, were $218.1 million, after deducting underwriting discounts and commissions of $16.7 million and expenses of $3.6 million.

Subsequent to the closing of the IPO, there were no shares of preferred stock outstanding. In connection with the closing of the IPO, the Company restated its Restated Certificate of Incorporation to change the authorized capital stock to 500,000,000 shares designated as common stock, and 10,000,000 shares designated as preferred stock, all with a par value of $0.001 per share.

Follow-on Offering

In March 2021, the Company completed a follow-on offering and issued 5,175,000 shares of common stock (including the exercise by the underwriters of their option to purchase an additional 675,000 shares of common stock) at a price to the public of $31.00 per share for net proceeds of approximately $150.1 million, after deducting underwriting discounts and commissions of $9.6 million and expenses of $0.7 million.

Liquidity

The Company’s operations have historically been financed through the issuance of common and redeemable convertible preferred stock and proceeds received under the Company’s collaboration and license agreements. Since inception, the Company has generally incurred significant losses and negative net cash flows from operations. During the six months ended May 31, 2021, the Company incurred a net loss of $50.7 million and had negative net cash flows from operating activities of $23.5 million. The Company had an accumulated deficit of $154.4 million as of May 31, 2021 and will require substantial additional capital for research and development activities. The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its drug candidates currently in development. As of May 31, 2021, the Company had cash, cash equivalents and investments of $496.5 million.

Management believes that its cash, cash equivalents and investments are sufficient to continue operating activities for at least 12 months following the issuance date of these condensed consolidated financial statements. Future capital requirements will depend on many factors, including the timing and extent of spending on research and development and payments the Company may receive under its collaboration agreements with Sanofi S.A. (Sanofi) and Gilead Sciences, Inc. (Gilead) or future collaboration agreements, if any. There can be no assurance that, in the event the Company requires additional financing, such financing will be available at terms acceptable to the Company if at all. If additional capital is not available, failure to generate sufficient cash flows from operations, raise additional capital and reduce discretionary spending could have a material adverse effect on the Company’s ability to achieve its intended business objectives.

7


 

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. The Company’s condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair statement of the Company’s financial position as of and for the three and six months ended May 31, 2021. The condensed consolidated balance sheet as of November 30, 2020 was derived from the audited annual financial statements as of that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. These interim financial statements and related disclosures have been prepared with the presumption that users of the interim financial statements have read or have access to the audited annual financial statements for the preceding fiscal year. Accordingly, these financial statements should be read in conjunction with the audited annual financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended November 30, 2020, as filed with the SEC. These interim results are not necessarily indicative of results to be expected for the full fiscal year or any future interim period.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Nurix Therapeutics, Inc. and its wholly owned subsidiaries, including DeCART. All intercompany balances and transactions have been eliminated in consolidation.

Reverse Stock Split

On July 17, 2020, the Company filed an amendment to the Company’s amended and restated certificate of incorporation to effect a reverse split of shares of the Company’s common stock and redeemable convertible preferred stock, each on a 1-for-3 basis (reverse stock split). The par value and authorized shares of the common stock and redeemable convertible preferred stock were not adjusted as a result of the reverse stock split. All issued and outstanding common stock, options to purchase common stock and per share amounts contained in the condensed consolidated financial statements have been retroactively adjusted to give effect to the reverse stock split for all periods presented.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to the useful lives of long-lived assets, the measurement of stock-based compensation, accruals for research and development activities, income taxes and revenue recognition. The Company bases its estimates on historical experience and on other relevant assumptions that are reasonable under the circumstances. Actual results could differ materially from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash, cash equivalents and investments. The Company’s investments consist of debt securities issued by highly rated corporate entities, the U.S. federal government or state and local governments. The Company’s exposure to any individual corporate entity is limited by policy. Deposits may, at times, exceed federally insured limits, but minimal credit risk exists. The Company invests its cash equivalents in highly rated money market funds. The Company has not experienced any credit losses on its deposits of cash and cash equivalents.

Other Risks and Uncertainties

The Company is subject to a number of risks similar to other early-stage biopharmaceutical companies, including, but not limited to, changes in any of the following areas that the Company believes could have a material adverse effect on its future financial position or results of operations: risks related to the successful discovery and development of its drug candidates, ability to raise additional capital, development of new technological innovations by its competitors and delay or inability to obtain drug substance and finished drug product from the Company’s third-party contract manufacturers necessary for the Company’s drug candidates, including due to the impact of the current coronavirus (COVID-19) pandemic, protection of intellectual property rights, litigation or claims against the Company based on intellectual property rights and regulatory clearance and market acceptance for any of the Company’s products candidates for which the Company receives marketing approval.

Moreover, the current COVID-19 pandemic, which is impacting worldwide economic activity, poses the risk that the Company or its employees, contractors, suppliers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities. The extent to which the

8


 

COVID-19 pandemic will impact the Company’s business will depend on future developments that are highly uncertain and cannot be predicted at this time.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s financial statements is highly uncertain and subject to change. Management considered the potential impact of the COVID-19 pandemic on its estimates and assumptions and there was not a material impact to the Company’s condensed consolidated financial statements as of and for the three and six months ended May 31, 2021; however, actual results could differ from those estimates and there may be changes to management’s estimates in future periods.

The Company relies on single source manufacturers and suppliers for the supply of its drug candidates. Disruption from these manufacturers or suppliers would have a negative impact on the Company’s business, financial position and results of operations.

Revenue Recognition

The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To recognize revenue from a contract with a customer, the Company performs the following five steps:

 

(i)

identify the contract(s) with a customer;

 

(ii)

identify the performance obligations in the contract;

 

(iii)

determine the transaction price;

 

(iv)

allocate the transaction price to the performance obligations in the contract; and

 

(v)

recognize revenue when (or as) the Company satisfies a performance obligation.

At contract inception, the Company assesses the goods or services promised within each contract, whether each promised good or service is distinct, and determines those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied.

The Company enters into collaboration agreements under which it may obtain upfront payments, milestone payments, royalty payments and other fees. Promises under these arrangements may include research licenses, research services, including selection campaign research services for certain replacement targets, the obligation to share information during the research and the participation of alliance managers and in joint research committees, joint patent committees and joint steering committees. The Company assesses these promises within the context of the agreements to determine the performance obligations.

Research and collaboration licenses: If a license is determined to be distinct from the other promises identified in the arrangement, the Company recognizes revenue from upfront payments allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring proportional performance for purposes of recognizing revenue from non-refundable, upfront payments. The Company evaluates the measure of proportional performance each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone payments: At the inception of each arrangement that includes research, development, or regulatory milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price. The Company uses the most likely amount method for research, development and regulatory milestone payments. Under the most likely amount method, an entity considers the single most likely amount in a range of possible consideration amounts. If it is probable that a significant revenue reversal would not occur, the associated milestone amount is included in the transaction price.

Sales-based milestones and royalties: For arrangements that include sales-based milestone or royalty payments based on the level of sales, and in which the license is deemed to be the predominant item to which the sales-based milestone or royalties relate to, the Company recognizes revenue in the period in which the sales-based milestone is achieved and in the period in which the sales associated with the royalty occur. To date, the Company has not recognized any sales-based milestone or royalty revenue resulting from its collaboration arrangements.

Customer options: Customer options, such as options granted to allow a licensee to extend a license or research term, to select additional research targets or to choose to research, develop and commercialize licensed compounds are evaluated at contract inception to determine whether those options provide a material right (i.e., an optional good or service offered for free or at a discount) to the customer. If the customer options represent a material right, the material right is treated as a separate performance obligation at the outset of the arrangement. The Company allocates the transaction price to material rights based on the standalone selling price. As

9


 

a practical alternative to estimating the standalone selling price of a material right when the underlying goods or services are both (i) similar to the original goods or services in the contract and (ii) provided in accordance with the terms of the original contract, the Company allocates the total amount of consideration expected to be received from the customer to the total goods or services expected to be provided to the customer. Amounts allocated to any material right are recognized as revenue when or as the related future goods or services are transferred or when the option expires.

Deferred revenue, which is a contract liability, represents amounts received by the Company for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The current portion of deferred revenue represents the amount to be recognized within one year from the consolidated balance sheet date based on the estimated performance period of the underlying performance obligation. The noncurrent portion of deferred revenue represents amounts to be recognized after one year through the end of the performance period of the performance obligation.

Contracts may be amended to account for changes in contract specifications and requirements. Contract modifications exist when the amendment either creates new, or changes existing, enforceable rights and obligations. When contract modifications create new performance obligations and the increase in consideration approximates the standalone selling price for goods and services related to such new performance obligations as adjusted for specific facts and circumstances of the contract, the modification is considered to be a separate contract and revenue is recognized prospectively. If a contract modification is not accounted for as a separate contract, the Company accounts for the promised goods or services not yet transferred at the date of the contract modification (the remaining promised goods or services) prospectively, as if it were a termination of the existing contract and the creation of a new contract, if the remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification. The Company accounts for a contract modification as if it were a part of the existing contract if the remaining goods or services are not distinct and, therefore, form part of a single performance obligation that is partially satisfied at the date of the contract modification. In such case the effect that the contract modification has on the transaction price, and on the entity’s measure of progress toward complete satisfaction of the performance obligation, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) at the date of the contract modification (the adjustment to revenue is made on a cumulative catch-up basis).

Recent Accounting Pronouncements

The Company is an “emerging growth company” (EGC), as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the JOBS Act). Under the JOBS Act, EGCs can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of the public company effective dates.

Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13), which modifies the disclosure requirements on fair value measurements by removing the requirement to disclose amounts of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation process for Level 3 fair value measurements, among other modifications to fair value measurement disclosure requirements. The Company adopted ASU 2018-13 as of December 1, 2020. The adoption did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (ASU 2016-02), which for operating leases requires the lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of lease payments, in its balance sheet. A modified retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, including a number of optional practical expedients that entities may elect to apply. ASU 2016-02 is effective for annual periods beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its financial statements and expects to recognize a right-of-use asset and a lease liability on the Company’s consolidated balance sheet, which will increase the Company’s assets and liabilities.

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect collectability. ASU 2016-13 also eliminates the concept of “other-than-temporary” impairment when evaluating available-for-sale debt investments and instead focuses on determining whether any impairment is a result of a credit loss or other factors. An entity will recognize an allowance for credit losses on available-for-sale debt investments rather than an other-than-temporary impairment that reduces the cost basis of the investment. ASU 2016-13 is effective for annual periods beginning after December 15,

10


 

2022, including interim periods within those annual periods. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its financial statements.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 (ASU 2018-18). ASU 2018-18 clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. ASU 2018-18 is effective for annual periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. ASU 2018-18 requires retrospective adoption to the date the Company adopted Topic 606 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings of the earliest annual period presented. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company does not expect the adoption to have a material impact on its financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes (ASU 2019-12), which is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its financial statements.

3. Collaboration Agreements

Gilead

In June 2019, the Company entered into a global strategic collaboration agreement with Gilead, which was amended in August 2019 (the Gilead Agreement), to discover, develop and commercialize a pipeline of targeted protein degradation drugs for patients with cancer and other challenging diseases using the Company’s DELigase platform to identify novel agents that utilize E3 ligases to induce degradation of five specified drug targets.

Under the Gilead Agreement, Gilead has the option to license drug candidates directed to up to five targets resulting from the collaboration and is responsible for the clinical development and commercialization of drug candidates resulting from the collaboration. The Company retains the option to co-develop and co-promote, under a profit share structure, up to two drug candidates in the United States, provided that the Company may only exercise such option once per licensed product and Gilead retains the right to veto the Company’s option selection for any one drug candidate of its choice. The collaboration excludes the Company’s current internal protein degradation programs for which the Company retains all rights, and also excludes the Company’s future internal programs, provided that the Company has distinguished future programs as excluded from the scope of the collaboration.

Over time, Gilead may elect to replace the initial drug targets with other drug targets. For drug targets that are subject to the collaboration, the Company is obligated to use commercially reasonable efforts to undertake a research program in accordance with a research plan agreed to by the parties and established on a target-by-target basis. The Company has primary responsibility under the agreement for performing preclinical research activities (including target validation, drug discovery, identification or synthesis) pursuant to a research plan. Each party will bear its own costs in the conduct of research activities. Gilead will be responsible for any development, commercialization and manufacturing activities, unless the Company exercises its co-development and co-promotion option. For those programs that the Company exercises its option to co-develop and co-promote, the Company and Gilead will split U.S. development costs as well as U.S. profits and losses evenly, and the Company will be eligible to receive royalties on net ex-U.S. sales and reduced milestone payments.

Upon signing the Gilead Agreement, Gilead paid the Company an upfront payment of $45.0 million plus $3.0 million in additional fees. Subsequently, the Company received payments of $13.5 million for research milestones and additional payments, including $2.5 million in the second quarter of 2021. As of May 31, 2021, the Company is eligible to receive up to approximately $2.3 billion in total additional payments, including up to $688.5 million upon the achievement of specified development milestones, up to $1.5 billion upon the achievement of specified sales milestones, subject to reduction for any product for which the Company exercises its option to co-develop and co-promote, and up to $138.8 million in certain additional fees related to target licensing, reservation and selection and research term extensions. In addition, the Company is eligible to receive tiered royalties from mid-single digit to low tens percentages on annual net sales from any commercial products directed to the optioned collaboration targets, subject to certain reductions and excluding sales in the United States of any products for which the Company exercises its option to co-develop and co-promote, for which the Company and Gilead share profits and losses evenly.

Subject to earlier expiration in certain circumstances, the Gilead Agreement expires on a licensed product-by-licensed product and country-by-country basis upon the later of (1) the expiration of the last to expire patent with a valid claim covering the applicable licensed product in the applicable country, (2) the expiration of any regulatory exclusivity for the applicable licensed product in the applicable country or (3) ten years after the first commercial sale of the applicable licensed product in the applicable country covered by the Gilead Agreement, provided that the term for any profit-shared licensed product in the United States will expire upon the expiration or termination of the applicable profit-share term as set forth in an applicable profit-share agreement to be negotiated upon

11


 

the Company’s exercise of its o